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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to __________________

Commission File Number: 001-38184

CAMBRIDGE BANCORP

(Exact Name of Registrant as Specified in its Charter)

Massachusetts	04-2777442
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1336 Massachusetts Avenue Cambridge, MA	02138
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (617) 876-5500

Securities registered pursuant to Section 12(b) of the Act:

Common Stock	CATC	NASDAQ
(Title of each class)	(Trading symbol)	(Name of each exchange on which registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒    No  ☐ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Small reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of July 31, 2021, the registrant had 6,965,557 shares of common stock, $1.00 par value per share, outstanding.

Table of Contents

CAMBRIDGE BANCORP AND SUBSIDIARIES

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Unaudited Consolidated Balance Sheets	1
	Unaudited Consolidated Statements of Income (Loss)	2
	Unaudited Consolidated Statements of Comprehensive Income (Loss)	3
	Unaudited Consolidated Statements of Changes in Shareholders’ Equity	4
	Unaudited Consolidated Statements of Cash Flows	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59
Item 4.	Controls and Procedures	59
PART II.	OTHER INFORMATION	60
Item 1.	Legal Proceedings	60
Item 1A.	Risk Factors	60
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3.	Defaults Upon Senior Securities	60
Item 4.	Mine Safety Disclosures	60
Item 5.	Other Information	60
Item 6.	Exhibits	61
Signatures		62

i

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

	June 30, 2021			December 31, 2020
	(dollars in thousands, except par value)
Assets
Cash and cash equivalents	$	98,789		$	75,785
Investment securities
Available for sale, at fair value (amortized cost $211,990 and $234,252, respectively)		212,266			237,030
Held to maturity, at amortized cost (fair value $499,885 and $260,139, respectively)		492,782			247,672
Total investment securities		705,048			484,702
Loans held for sale, at lower of cost or fair value		911			6,909
Loans
Residential mortgage		1,346,262			1,298,868
Commercial mortgage		1,438,084			1,358,962
Home equity		92,983			106,194
Commercial and industrial		357,937			347,855
Consumer		45,883			41,769
Total loans		3,281,149			3,153,648
Less: allowance for credit losses on loans		(35,029	)		(36,016	)
Net loans		3,246,120			3,117,632
Federal Home Loan Bank of Boston Stock, at cost		4,816			5,734
Bank owned life insurance		46,574			46,169
Banking premises and equipment, net		17,586			18,158
Right-of-use asset operating leases		33,536			34,927
Deferred income taxes, net		10,486			11,639
Accrued interest receivable		8,983			9,514
Goodwill		51,912			51,912
Merger-related intangibles, net		2,797			2,977
Other assets		75,729			83,239
Total assets	$	4,303,287		$	3,949,297
Liabilities
Deposits
Demand	$	1,208,951		$	1,006,132
Interest-bearing checking		672,794			625,650
Money market		726,101			532,218
Savings		942,865			984,262
Certificates of deposit		213,847			254,821
Total deposits		3,764,558			3,403,083
Borrowings		17,244			32,992
Operating lease liabilities		35,923			37,448
Other liabilities		66,061			74,042
Total liabilities		3,883,786			3,547,565
Shareholders’ Equity
Common stock, par value $1.00; Authorized: 10,000,000 shares; Outstanding: 6,965,557 shares and 6,926,728 shares, respectively		6,966			6,927
Additional paid-in capital		228,387			226,967
Retained earnings		184,790			165,404
Accumulated other comprehensive income (loss)		(642	)		2,434
Total shareholders’ equity		419,501			401,732
Total liabilities and shareholders’ equity	$	4,303,287		$	3,949,297

The accompanying notes are an integral part of these unaudited consolidated financial statements.

1

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

	Three Months Ended						Six Months Ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
	(dollars in thousands, except share data)
Interest and dividend income
Interest on taxable loans	$	30,557		$	28,130		$	60,882		$	51,468
Interest on tax-exempt loans		275			211			497			409
Interest on taxable investment securities		2,023			1,521			3,608			3,244
Interest on tax-exempt investment securities		633			601			1,291			1,196
Dividends on FHLB of Boston stock		12			52			12			153
Interest on overnight investments		28			16			59			156
Total interest and dividend income		33,528			30,531			66,349			56,626
Interest expense
Interest on deposits		1,006			1,396			2,281			4,525
Interest on borrowed funds		141			282			281			848
Interest on subordinated debt		—			64			—			64
Total interest expense		1,147			1,742			2,562			5,437
Net interest and dividend income		32,381			28,789			63,787			51,189
Provision for (release of) credit losses		(901	)		14,430			(1,107	)		16,430
Net interest and dividend income after provision for (release of) credit losses		33,282			14,359			64,894			34,759
Noninterest income
Wealth management revenue		8,623			7,035			16,774			13,662
Deposit account fees		484			695			958			1,486
ATM/Debit card income		405			290			738			597
Bank owned life insurance income		209			165			405			325
Gain on disposition of investment securities		—			69			—			69
Gain on loans sold		165			193			734			312
Loan related derivative income		567			334			1,238			844
Other income		453			191			908			495
Total noninterest income		10,906			8,972			21,755			17,790
Noninterest expense
Salaries and employee benefits		16,462			13,542			32,508			26,558
Occupancy and equipment		3,503			2,938			7,079			5,745
Data processing		2,179			1,832			4,213			3,517
Professional services		1,297			1,098			2,569			1,957
Marketing		953			486			1,416			742
FDIC insurance		261			318			597			497
Nonoperating expenses		—			4,366			—			4,619
Other expenses		618			1,007			1,110			1,877
Total noninterest expense		25,273			25,587			49,492			45,512
Income (loss) before income taxes		18,915			(2,256	)		37,157			7,037
Income tax expense (benefit)		4,971			(540	)		9,714			1,521
Net income (loss)	$	13,944		$	(1,716	)	$	27,443		$	5,516
Share data:
Weighted average number of shares outstanding, basic		6,930,268			5,912,889			6,918,779			5,652,908
Weighted average number of shares outstanding, diluted		6,998,936			5,912,889			6,993,437			5,670,438
Basic earnings (loss) per share	$	2.00		$	(0.29	)	$	3.95		$	0.97
Diluted earnings (loss) per share	$	1.98		$	(0.29	)	$	3.91		$	0.97

The accompanying notes are an integral part of these unaudited consolidated financial statements.

2

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
	(dollars in thousands)
Net income (loss)	$	13,944		$	(1,716	)	$	27,443		$	5,516
Other comprehensive income (loss), net of tax:
Available for sale securities
Unrealized holding gains (losses)		1,035			810			(1,852	)		3,310
Less: reclassification adjustment for gains realized in net income		—			(57	)		—			(57	)
Total unrealized gains (losses) on available for sale     securities		1,035			753			(1,852	)		3,253
Interest rate swaps designated as cash flow hedges
Unrealized holding gains (losses)		3			633			(319	)		4,960
Less: reclassification adjustment for gains realized in net income		(466	)		(363	)		(920	)		(444	)
Total unrealized gains (losses) on interest rate swaps		(463	)		270			(1,239	)		4,516
Defined benefit retirement plans
Change in retirement liabilities		7			—			15			(1	)
Other comprehensive income (loss)		579			1,023			(3,076	)		7,768
Comprehensive income (loss)	$	14,523		$	(693	)	$	24,367		$	13,284

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3

CAMBRIDGE BANCORP AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended June 30,
Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total Shareholders’ Equity